Lawyer who has sued Homejoy tells Ars new document is "good news for workers."

Further Reading

A new policy guidance document was released earlier this week by the Department of Labor over the status of contract workers versus employees.

The 14-page "guidance" doesn't represent new law, but it does suggest that various regulatory agencies, including at the federal level, are looking much more closely at how contract workers are treated.

A number of high-profile tech companies, including Uber, Lyft, Homejoy, and Instacart, have come under scrutiny in recent months as an increasing number of workers have challenged the regime under which they work. Just last month the California Labor Commission issued a ruling in favor (PDF) of a former Uber employee, ordering the company to reimburse her for costs incurred while driving for Uber.

Many of those companies are now facing lawsuits arguing that their workers should in fact be treated as employees (where social security and other benefits would be paid by the company) rather than independent laborers.

Misclassification of employees as independent contractors is found in an increasing number of workplaces in the United States, in part reflecting larger restructuring of business organizations. When employers improperly classify employees as independent contractors, the employees may not receive important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation. Misclassification also results in lower tax revenues for government and an uneven playing field for employers who properly classify their workers. Although independent contracting relationships can be advantageous for workers and businesses, some employees may be intentionally misclassified as a means to cut costs and avoid compliance with labor laws.

"[The guidance] relies heavily on DialAmerica, a 30-year-old case involving stay-at-home moms who filled out computer punch cards with phone numbers and returned them to the company," Michael Leroy, a labor law professor at the University of Illinois, told Ars by e-mail.

Further Reading

"They were paid piece rate—and could control their time from zero to unlimited hours—just like Uber drivers. DialAmerica signed them on as independent contractors and also said they had full control of their time at home or wherever."

But, as the professor noted, a federal court rejected that argument, finding that the labor provided here was "core to the enterprise."

"Hence they were employees—and, as a result, collected lots of backpay and overtime because they were paid only piece rate (another tie-in to Uber)," he said. "I would call this the opening brief in the Department of Labor’s push to bring a complaint against Uber and similar forms."

"In the 'sharing economy,' for example, many companies have sought to avoid employment laws by proclaiming that their workers are independent contractors," he told Ars. "But, at the same time, these companies not only have substantial control and supervision of their workers but also make it clear to their customers and their workers that it is the company providing the service to the customers."

Uber, for its part, maintains that its drivers want to be independent and enjoy the flexibility, according to a study that the company commissioned earlier this year.

"87 percent of drivers say the main reason to use Uber is because they love being their own boss," Jessica Santillo, an Uber spokeswoman, e-mailed Ars. "And, like the vast majority of independent contractors in the US, 73 percent of Uber partners say they would rather have a job where they choose their own schedule and are their own boss than a steady 9-5 job with some benefits and a set salary."

However, upon further inspection, the methodology of this survey does not specifically state that it is a truly random sample of Uber drivers, nor how many Uber drivers exist nationwide. It simply says that 601 interviews were conducted of drivers in various cities around the country.

Instacart and Homejoy did not immediately respond to Ars' request for comment.

Cyrus Farivar
Cyrus is a Senior Tech Policy Reporter at Ars Technica, and is also a radio producer and author. His latest book, Habeas Data, about the legal cases over the last 50 years that have had an outsized impact on surveillance and privacy law in America, is out now from Melville House. He is based in Oakland, California. Emailcyrus.farivar@arstechnica.com//Twitter@cfarivar